Auction clearance rates have eased back as investors pull out of the market, creating a build-up of stock especially in Sydney.
The preliminary auction clearance rate was 65.4 per cent this week across 3335 auctions nationally, making it the third busiest week for auctions so far this year, on CoreLogic figures.
That figure was up on the 62.8 per cent across 2907 auctions last week.
The shift toward a lower clearance rate has become more evident, with final clearance rates falling below 65 per cent for the past four weeks.
By contrast, at this time last year the 2987 homes taken to auction nationally achieved a clearance rate of 74.4 per cent.
Sydney has a softening market. It has recorded a preliminary clearance rate of 61.5 per cent so far, with 1035 properties taken to auction across the city.
Final clearance rates have been below 60 per cent since the last week of October in Sydney.
Melbourne booked a healthier rate of 69.6 per cent over 1717 auctions.
Despite the Sydney slowdown, a six-bedroom Paddington property on two titles sold for $5.16 million, comfortably above expectations.
On a 412 square metre block, it included a freestanding double-fronted main residence and a self-contained cottage with separate entry.
With six registered buyers, bidding began at $4 million and the property was on the market at $5 million.
“We’re still seeing good numbers in Paddington. There is a significant lack of good property in the suburb,” said Sam Towndrow, of Ballard Property, who handled the Paddington property with colleague Sam Cooke.
Even so, he noted that the buyers are becoming “a bit more particular”.
“If it’s not 100 per cent at this time of year, then they will wait. If property is still priced well then buyers will attend to it.”
Investor borrowing has fallen at its fastest pace in two years, official figures this month showed, with housing finance dipping 3.6 per cent overall. Sydney house prices dropped for the second month in a row in October, led by declines in prices of houses rather than apartments.
The cooling market adds weight to the Reserve Bank of Australia’s point earlier this month that tighter lending standards and macroprudential controls are taking effect.
CoreLogic’s Kevin Brogan expects clearance results could fall lower when they are finalised later this week .
“The trend in Sydney in particular recently is that it’s been much more difficult for agents to complete the deal. That’s exerted downward pressure on the final clearance rate.”
The amount of stock on the market in Sydney is up by 20 per cent compared to the comparable period last year, as investors are side-lined by the clampdown in lending to their sector.
“From a buyer’s point of view there is more choice. That increase in supply is a significant factor,” Mr Brogan said.
Melbourne has not experienced a similar build-up in stock, with levels on par with where they were at in the comparable period last year, Mr Brogan said.
“That’s where you’re seeing a gap opening up between Melbourne and Sydney.”
In Melbourne, the most expensive home sold at auction over the weekend was the five-bedroom home at 23 Maling Road in Canterbury, which changed hands for $4.125 million.
Meanwhile, the Canberra market performed strongly, with a 67.6 per cent clearance rate from 130 homes taken to auction. Adelaide booked a solid 66.3 per cent from 146 auctions.
In Brisbane, where voters are preparing for a November 25 state election, the clearance rate rose to 49.6 per cent across 213 auctions this week.